Hitachi, which is struggling with flat TV losses, faces intensifying price competition from bigger TV makers Sony Corp, Sharp Corp and South Korea's Samsung Electronics and LG Electronics Inc.

Hitachi will buy fabricated glass panels -- the high-end part of a plasma TV -- from Matsushita, in a step that some analysts say could lead to an eventual withdrawal from the business.

"It looks like Hitachi wanted to withdraw from plasma TVs, if not from TVs altogether, but didn't have the gumption to do it in the end," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"When it does finally pull the plug, it will be a positive."

Hitachi holds 7.5 percent of the shrinking plasma TV market according to research firm DisplaySearch.

With the deal, Matsushita secures a customer amid plans to build a new domestic plasma panel and TV plant next year, even as LCD TVs continue to take market share from the plasma TV camp.

Price declines have already forced Japan's Pioneer Corp to announce in March an exit from plasma display panel production, buying them from Matsushita instead.

Hitachi has been struggling with idle production capacity as its sales stall in the United States and Europe. It will book a 40 billion yen ($383 million) impairment loss on its existing panel facilities.

Hitachi said it would continue to make the circuit boards at its own unit, Hitachi Plasma Display Ltd.

Hitachi and Matsushita have already teamed up in liquid crystal display panels. Matsushita, which will change its name to Panasonic on Oct.1, took control of Hitachi group member IPS Alpha Technology Ltd this year.

Hitachi's stock ended 0.3 percent higher at 730 yen and Matsushita fell 3.2 percent to 1,912 yen, while Tokyo's electrical machinery subindex fell 2.2 percent.

By: DocMemory
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